I am the President of Let Voters Decide, a coalition that supports state tax reform and the protection of voters' rights at the ballot box. I am also a Missouri-based entrepreneur (and co-founder of Pelopidas, LLC) with almost two decades of state & local legislative lobbying experience across nearly one third of our fifty states. Over the last five years, my professional teams of advocates and I have been researching, improving, and suggesting changes to our state tax code systems to help create jobs.
You can follow me on Twitter @pelopidas.

Plan To Split California Into Six States Closer To Reality

Thanks to the signatures of more than 807,000 concerned Californians, an ambitious idea has moved that much closer to becoming a reality. The “Six Californias” Initiative, sponsored by Silicon Valley venture capitalist Tim Draper, seeks to create areas that are more governable, more productive, and more successful. As I wrote in this column back in February, the initiative would achieve the triumvirate goal of proportionately distributing California’s debts based on population, ending all tax collections and spending by the existing State of California, and creating new, more representative governments with the ability to enact public policies that make the most sense for the new state.

What some cynically called a “publicity stunt” will now be a question on the November 2016 ballot, and California voters would do well to take a close look at the potential advantages created by “Six Californias.” Based on analysis of nearly two decades’ worth of IRS taxpayer data, as well as data from the United States Census Bureau, we find that four of the six proposed new states would gain both net adjusted gross income and population. In fact, and contrary to scare-tactic claims by liberal media outlets, the new state of Central California (which would encompass the bankrupt cities of Stockton and Bakersfield) would see a net gain in AGI ($1.36 billion) and population(49,021 taxpayers).

Photo Credit: sixcalifornias.info

The appeal of the “Six States” Initiative also lies in its allowance for governments that are smaller, and thereby more efficient and closer to their constituents. The new, individual states would share a number of common characteristics – including socioeconomic backgrounds, legislative needs, and political affiliation – thereby giving elected officials greater knowledge of what their constituents want and need.

Draper, a registered independent who has built a career on smart risk-taking and startup investing, views California as a borderline “failed state” with “the worst-managed government in the country.” Earlier this year, he raised an important point on the American Public Media program Marketplace, stating that California pays the most for education but ranks a dismal 46th in student test scores as measured by the U.S. Department of Education. This fact alone should alarm California taxpayers, whose top marginal state income tax rate is the highest in the nation, at 13.3 percent. Compare that to Texas, which levies no personal income tax on its residents, yet provides far superior educational outcomes. (By way of comparison: Texas students’ test scores are 29th highest out of 50, compared to California’s 46th. Plus, Texas employs 345 educators for every 10,000 of population, whereas California employs only 231 educators per 10,000 people.)

In making the case for the Six States, Draper also points to California’s persistent prison problem. In that same Marketplace interview, Draper said, “We pay among the most for prisons, and we are among the highest recidivism rate.” Again, the comparison to Texas is eye-opening: In that low-tax, business-friendly state, the prison system runs more effectively. The annual cost of holding a prisoner in Texas is $21,390 ($58.60 per day); the annual cost of holding a similar prisoner California is $47,421 ($129.00 per day). Additionally, poverty as a share of population is significantly smaller in Texas (16.5 percent) than in California (23.5 percent). California has the greatest number of citizens on welfare, while Texas has the fourth-lowest.

The comparison points are startling and plentiful (and my co-authors and I provide more than 50 of them in our new book An Inquiry into the Nature and Causes of the Wealth of States), but the key takeaway is this: Low-tax Texas thrives while high-tax California stifles growth at every turn. Why not take a fresh approach to the way the state functions; why not support a bold initiative that could jumpstart a state in decline?

To quote Draper, speaking to a group of tech insiders earlier this year: “We need to do something structural, something fresh. If we don’t try, we’re failing in our complacency.”

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